It would have sold like hotcakes at $199 or even $299. But $499? I predict a flop.

Anyone with a working brain knew that the $199 price was bogus. This device likely has the highest build quality of any tablet or laptop ever made; to expect it to sell at the prices used for the "piece of junk" market (like the Silvania Android tablets that are sold at drug stores and are literally given away by banks when one opens a savings account) is foolish.

As far as your "flop" prediction, you might want to actually put a numerical definitoin on that, and when you do so, know that Microsoft is only making 3 to 5 million units for the rest of this year. Given that, what is your definition of flop? How many must Microsoft sell by the end of the year to avoid "flop" by your definition?

It did sound too good to be true. That's why I didn't hold my breath waiting for the Surface; last month I bought the 7" Samsung Galaxy Tab for $250-ish (the 10" model would have cost $399, which is generally beyond my budget for unnecessary toys). Both of those models are priced $50 lower now than last month - quality units that like it or not, Microsoft will be competing with on price.

The "flop" prediction isn't based on price alone, but it's obviously important. People who want a quality affordable tablet are going to choose the Nexus, Samsung, Kindle, etc. People who want to spend more for a trendy tablet at still going to choose the iPad. Then there's the software. How long will it take for Microsoft's app store to catch up to Android and Apple? We've yet to see any reviews of the Surface, but that could be a factor as well.

know that Microsoft is only making 3 to 5 million units for the rest of this year.

The lastest iPad sold three million for the first weekend alone, and Apple has sold 84 Million iPads so far. So if your numbers are accurate Microsoft is setting the bar very low indeed. Keeping the supply artificially low to create the illusion of demand? Or they really expect weak demand for the Surface?